Colombia's $201B Budget Passes as Deficit Fears Mount

Colombia’s Congress approved a 2027 national budget of 634.9 trillion pesos, about US$201.1 billion, in the early hours of Tuesday, Oct. 20, while the government projects a fiscal deficit of 9.4% of gross domestic product. The spending plan marks the De la Espriella administration’s first major legislative victory. It’s also larger than the plan that came before it.

The new total rises from the 555.8 trillion pesos, roughly US$176.5 billion, allocated for 2026. It exceeds by more than 10% the proposal former President Gustavo Petro’s administration submitted, despite the new government’s pledge to reduce state spending.

The Vote

The Senate passed the bill late Monday night, 57 votes to two. The House of Representatives followed in the early hours of Tuesday, 112 to one. Both chambers approved matching versions, ending a long day of debate marked by concerns about the deficit and rising public debt.

Where the Money Goes

Debt service takes the largest share: 144 trillion pesos, about US$45.7 billion. Education receives 93 trillion pesos, approximately US$29.5 billion, while health care gets 81.6 trillion pesos, approximately US$26 billion. Defense receives 74.9 trillion pesos, about US$23.8 billion, reflecting the administration’s priority on security and the state’s operational capabilities in confronting illegal armed groups.

Put simply, interest gets more money than schools and more than the military. Finance Minister Miguel Gomez made that point himself. “The budget recognizes the revenue the country can collect and incorporates cuts to address the fiscal imbalance. Debt absorbs resources that are needed for investment: correcting course requires austerity and greater efficiency in public spending,” he told lawmakers, urging them to vote in favor. He thanked legislators for their support after the vote.

The Cost of Lost Confidence

The figures behind that argument are stark. Public debt keeps rising, and Colombia needs to restore financial market confidence. The country lost its investment-grade credit rating in 2021, five years ago, pushing borrowing costs higher. Every peso spent servicing debt is a peso unavailable for roads, classrooms or soldiers.

The administration has announced a fiscal reform called the Rescue Law, which aims to reduce the projected deficit. Its details weren’t part of Tuesday’s vote. Lawmakers approved a spending plan; the harder work of closing the gap lies ahead.

Opposition and Peace-Process Institutions

Not everyone was satisfied. The Historic Pact, former President Petro’s political movement and the main opposition force, criticized cuts to education programs and public institutions, including the National Learning Service (SENA), which provides free technical training across the country. Lawmakers also debated how to divide funding among subsidies, investment and institutional operating expenses. According to the report, the final distribution seeks to reconcile executive priorities with legal obligations and spending commitments.

Some institutions created to implement the 2016 peace agreement with the former Revolutionary Armed Forces of Colombia (FARC) face funding cuts. They include the Special Jurisdiction for Peace (JEP), the transitional justice tribunal that investigates and prosecutes the most serious crimes of the armed conflict, and the Search Unit for Persons Presumed Missing (UBPD). The cuts prompted concerns about potential effects on judicial investigations, searches for missing people and identification of victims, including in international proceedings. The report also recalled a United Nations call earlier in October for Colombia to uphold its commitments under the peace agreement reached a decade ago.

Why This Matters:

Colombia’s budget shows how hard it is to cut spending once a government has to run one. An administration that promised restraint delivered a plan more than 10% above its predecessor’s proposal, with debt service now the largest single line item. A projected deficit of 9.4% of GDP, a lost investment-grade rating and higher borrowing costs all point the same way: markets will judge the Rescue Law, not the budget vote. The unresolved question is whether the government can finance its security and social priorities without piling on more debt, or whether the cost of adjustment lands on public services. That answer will shape Colombia’s borrowing costs for years.